According to a Crisil report, the Indian pharmaceutical industry is projected to achieve a revenue growth of 8-10% in the current fiscal year. This growth is attributed to a combination of factors, including stable domestic demand and increased exports to regulated markets, although semi-regulated markets are facing challenges.
Crisil’s findings are based on a survey encompassing 186 pharmaceutical companies, collectively responsible for more than half of the sector’s annual revenue of Rs. 3.7 trillion in the previous fiscal year.
Mr. Aniket Dani, Director of Crisil Research, anticipates that, similar to the preceding fiscal year, domestic growth in FY24 will be fueled by a 5-6% rise in realizations. This increase is supported by significant price adjustments permitted by the National Pharmaceutical Pricing Authority (NPPA) for drugs under price regulation. Additionally, sales of existing medications and the introduction of new ones are expected to contribute to a 3-4% rise in volume.
By reducing input and logistics expenses and alleviating pricing pressures in the US generics market, it is predicted that operating profitability will rise by 50-100 basis points (bps) to reach 21% during this fiscal year. Crisil notes that this follows two consecutive years of margin contraction, primarily due to high pricing pressures in the US and significant input cost escalations resulting from supply chain disruptions during and after the COVID-19 pandemic.
Due to the sustained increase in lifestyle-related ailments and the ongoing emphasis on health awareness following the pandemic, Crisil expects domestic sales to expand by 8-10% in the current fiscal year. The chronic disease segment is projected to be the primary driver of this revenue growth.
In terms of exports, formula exports are anticipated to rise by 7-9% in rupee terms in the current fiscal year, primarily driven by factors such as increased volume, the introduction of new products, and a reduction in price pressures within the US generics markets.
Furthermore, the report suggests that a decrease in working capital debt is expected for the current fiscal year. This reduction can be attributed to lower input costs and the normalization of supply chains, which should bring inventories back to pre-pandemic levels.
